APNewsBreak: Vascular Solutions' federal indictment imperils Minnesota job-expansion subsidy

MarketsAssociated Press

A Minnesota medical-device firm's push for $800,000 in public subsidies tied to a major expansion is in limbo after the company and its chief executive were federally indicted last week, a state agency official said Tuesday.

The Vascular Solutions' bid for a Minnesota Job Creation Fund award has been scheduled for a hearing Friday at the Department of Employment and Economic Development, which administers the program. Agency spokesman Monte Hanson told The Associated Press that the criminal indictment has prompted a reexamination of the subsidy package and officials are weighing whether they'd even hold the hearing.

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The Maple Grove-based company and CEO Howard Root face multiple charges of conspiracy to sell a varicose-vein treatment device for unapproved medical uses. The company settled a whistleblower case in February for $520,000 related to the marketing of devices that are the basis of the criminal charges that a Texas-based grand jury returned Thursday, but it didn't admit wrongdoing.

Jon Austin, a spokesman for Vascular Solutions, said the indictment represents unproven allegations that the company believes are wrong.

"Our operations are unaffected by these developments, and our plans for growth and expansion in Maple Grove are unchanged," Austin said in a written statement.

Last month, the Maple Grove City Council endorsed the company's $8.7 million expansion proposal and urged approval of the state grant money.

"Our involvement is nothing beyond that resolution," city clerk Al Madsen said Tuesday, stressing that no municipal tax dollars had been pledged or offered.

Vascular Solutions has a product line of more than 80 devices — most of which are catheters — and had more than $110 million in sales last year. The fast-growing company has been looking to expand its physical presence and workforce in Minnesota, proposing to double its manufacturing space and adding 60 skilled employees over two years with an average pay of $32 per hour.

Vascular Solutions was eligible for up to $367,000 in state grants for the jobs it planned to add and a $435,000 rebate tied to its purchase and remodeling of a 60,000-square foot building adjacent to the existing plant.

The Minnesota Job Creation Fund is less than a year old but has committed more than $12 million to two-dozen companies. The more the new jobs pay — salaries must be at least $26,000 per year — the bigger the potential rebate for companies. Qualifying companies must prove they added the jobs and hold them in place for at least a year to unlock the money.